Why should one invest in an endowment policy?
Frequently purchasing things, even if they are expensive, is a not so rare trait amongst people. But, especially after a worldwide pandemic, spending some amount to buy those guilty pleasures in your life has become a widespread practice. So, how does one ensure that they are not only able to spend this money, but also save a considerable chunk of it for future needs? An endowment policy is the answer to this question.
Endowment policies were designed for both habitual spenders and people who are looking to make a disciplined route for making long-term savings.
Benefits of an Endowment Policy
1. It is a life insurance policy
An endowment policy provides you life coverage and is a very cleverly made life insurance policy. Along with life coverage, it also provides a gateway to save money regularly over a defined period of time. This is because the policy can provide a lump-sum amount when it matures. This amount can be used for various purposes, such as paying for children’s tuition, saving for retirement, paying off loans or mortgages, and much more.
Another benefit of an endowment policy is that it gives the complete sum assured amount to the policy’s beneficiary, in the case that the policyholder passes away. Thus, in simple terms, endowment policies hit two birds with one stone by providing life cover and also offering long-term maturity benefits to the policyholder.
2. Risk-Free and Long-Term
An endowment policy might provide lower returns when compared to ULIP plans or other life insurance plans, but they are very fairly risk-free. Other types of policies can’t claim the same amount of low risk association as an endowment policy can.
Additionally, endowment plans also offer the policyholders with tax benefits on their returns. This makes endowment policies the most alluring plans for investors, as the maturity benefits provided under them can be used to almost their full extent.
3. Choices are many
Endowment policies, by their nature, are long term. The longer the policy period is, the higher the returns and benefits. Hence, some people might not be sure about investing in one since it would require a regular inflow of money to pay off the premiums. However, endowment policies get another win here as they offer flexi pay and single pay plans too!
So, even if you have an irregular income, you can invest in an endowment policy without a problem. The key benefits for flexi pay and single pay policies remain the same with minor differences, and can prove to be a great source for regular savings.
Invest in an Endowment Policy
An endowment policy can prove to be a brilliant buy for regular spenders and help in building a good corpus for future expenses that might otherwise prove to be a burden on your pockets. Financial security for the family? Check. Regular savings? Check. Maturity benefits for the policy? Check. That sums up why you should invest in an endowment policy.